Demystifying Crypto Donations

This transcript has been generated by an A.I. tool. Please excuse any typos.

00:00 - 00:40

The crypto sectors recent plummet to just under $1,000,000,000,000, or about a third of its all time high from late last year has been very well. It has been a brutal freefall, even compared to other beaten down markets this year. But keep in mind that during the last crypto winter, as some call it, which was in 2018, crypto bottomed at approximately $100 billion. And even with this year's plunge, an extraordinary amount of wealth has been created and given away by crypto investors turned philanthropists. So however you might feel about them, digital assets have the potential to seriously disrupt philanthropy. Of course, many of us could benefit from some demystifying on the whole crypto philanthropy phenomenon, which is what we will do today.

00:49 - 01:42

Hi everyone and welcome to Inspired Investing. I am your host, Claire Golla, head of Foundation and Institutional Advisory at Bernstein. This podcast is where we strive to connect and share insights with listeners like you who are engaged in the non-profit, social and broader philanthropy sectors. Before we dive in today, I have a quick spoiler alert for all of you. I am not a cryptocurrency expert shocker, but thankfully our guests are, and they'll help us get to the bottom of this very innovative trend. Alex Wilson co-founded The Giving BLOCK to help make it easier both for donors to give and for nonprofits to accept cryptocurrency donations. While a Tori Rosetti serves as lead adviser for digital marketing and innovation at the nonprofit organization Save the Children, and he also heads the organization's Web3 initiative. Thank you guys both for being here today.

01:43 - 01:44

Thanks for having us today.

01:45 - 01:45

Great to be.

01:45 - 02:11

. Here. Great to have you here, because we are receiving lots and lots of questions, as I've mentioned to you guys, about the acceptance of crypto contributions and how to give. So there's a ton to cover. We could probably fill an entire hour with this, but let's keep it high level in the interest of time. So, Alex, I'm going to start with you. What's your story? Tell us about how you. How did you come up with the Giving blog? Right. And what is it exactly?

02:11 - 03:02

Yeah, sure. So the quick back story was, you know, I essentially got really into crypto back in 2016, in 2017 and just realized, you know, I thought crypto was going to have a huge impact on the world in the coming years and wanted to spend as much time as possible thinking about crypto and its different use cases. And around that same time in 2017, I had a good friend from college who was actually working at a nonprofit. And, you know, one day I eventually convinced him to start getting into crypto and taking a closer look. And we had this realization together that, you know, crypto donors are really going to become, you know, a new and really growing donor demographic that nonprofits aren't tapping into yet. And they're probably going to need some help tapping into it because most nonprofits at the time weren't set up to accept crypto, and they still aren't now. So together in 2018, we decided to start the giving block.

03:02 - 03:16

That's amazing. I mean, it's so true. Many organizations aren't yet set up and are asking how they can get there. So how much have you facilitated in terms of cryptocurrency for you, in terms of dollars to charitable organizations through the Giving BLOCK?

03:16 - 03:24

Yeah, in just the last year or so, we've raised over $100 million for roughly 1500 different nonprofits that we work with.

03:24 - 03:28

That's amazing. And there's so much more opportunity out there. That's great. Thank you.

03:28 - 03:39

So now I'm going to shift it to a story. So a story you have referred to Save the Children as the OG of crypto philanthropy, which I thought was really funny. A great. How did that come about?

03:39 - 04:03

Because Save the Children has been a pioneer and an innovator for more than 100 years, and crypto philanthropy is no exception. In fact, our first Bitcoin donation was accepted back in 2013, so it was pretty early days and we have a track record of pioneering and innovating and within Save the Children, I call myself an entrepreneur because I do as well.

04:04 - 04:30

That's great. So, I mean, 2013, I'm not sure if I even knew what what it was, what it was back then. So that's that's pretty amazing. So I do want to get into it to our eye in terms of how you connected with the Giving blog. But first, maybe, Alex, you could walk us through the mechanics of how this works. So how would a nonprofit go about even becoming a part of what you've referred to as sort of this ecosystem? And you know what happens when a donation is made?

04:31 - 05:04

Yeah. So our goal was really to make accepting crypto for nonprofits just as easy as it is to accept, you know, let's say, other online gifts like a credit card. So when a nonprofit signs up to work with us, they're getting an easy, an automated way to accept crypto that has features like automatic conversion from crypto to US dollars. So they don't have to worry about volatility. Things like automatic tax receipts for the donors, you know, automatically pre filling forms 80 to 80 to 80 to 83 and having all that sort of real time donor information in a dashboard that you've come to expect from a fundraising platform.

05:04 - 05:36

The thing that really makes us unique is, you know, when a nonprofit signs up with us, you're essentially, you know, getting access to three different companies in one in the sense that we're helping with the actual donation processing itself. On the tactical side, we're also providing the crowdfunding platform that's really become the go to place to donate crypto. And the third piece is we basically have an entire client access team that's dedicated to strategizing with our clients for how they should be fundraising crypto. Because it's one thing to accept crypto, it's a whole nother thing to actually fundraise it effectively.

05:36 - 05:50

So actually, let me get back to you. What were some of the things that you looked for in a partner in order to facilitate these kinds of gifts? I mean, you're going back a few years, right? So help us understand how you walk down that path.

05:50 - 06:47

Right. So we're a nonprofit humanitarian organization. We're really good at saving kids. But cryptocurrency was new to us, so we were looking for a partner that could automate the process for us. Another key thing that nonprofits usually consider is that it takes a lot of resources and a lot of expertise, which as an efficient nonprofit, we didn't necessarily have either one of those. So a partner that can automatically transfer the crypto donations into fiat currency, that was one of the considerations. Number two, to provide receipts to donors automatically on our behalf. That was the second thing that was really important. And then as a bonus, if the service provider wasn't just a utility, but rather a strategic partner to provide counsel and marketing expertise. So that was the trifecta.

06:48 - 07:06

Right. Let's unpack that a little bit, because you've mentioned even before and to our eye that this whole, you know, accepting of cryptocurrency and kind of building that into the development program for an organization is the farthest thing from the field of dreams. Like if you build it, they will not necessarily just come. Right. So what do you mean by that?

07:06 - 07:30

I mean, it's important to accept crypto. That is the very first thing, but that's not the last thing. Your job isn't over just accepting cryptocurrency. You need to have a strategy. You need to have a comms plan, a marketing plan, a donor stewardship plan, and some of the principles of traditional philanthropy apply. But many are new. You can't put new wine in old bottles, otherwise the bottles will break.

07:32 - 07:39

Got it. What's displacing things like just traditional email, right? Like, where are you going for some of these donors, I guess?

07:39 - 07:44

Well, just like email disrupted direct mail.

07:44 - 07:45

Mm hmm.

07:45 - 08:05

Tools like Twitter and clubhouse and Discord are displacing traditional email. They're faster, they're mobile optimized, and they are more private where they can be even in WhatsApp. So that's what we're seeing, is there's new tools of the trade.

08:05 - 08:28

Yeah, exactly. Those frontiers created, those new places right to go. I think that those are the things that many traditional fundraisers or organizations, they don't have the expertise, right? They don't have the the wherewithal to go there. So all valuable things that I think my teenagers are associated at Bernstein need to teach me about because the next generation of investors and donors are there. Right.

08:28 - 08:48

So Alex, I'd love to piggyback a little bit on a tourist comment. So it sounds like organizations do need more than just this vehicle, right, for accepting cryptocurrency. And so how does that fit into your broader vision for the giving blocks? Tell me a little bit. You mentioned it's sort of three organizations in one. Tell me a little bit about that. The other piece is besides just the acceptance.

08:49 - 09:31

Yeah. So what's really unique about having this holistic solution is that, you know, we're thinking about the nonprofit side of the market and the donor side of the market. So, you know, like Kothari is talking about, we're working with them strategically to come up with a plan of our how are we going to target? Owners. Where are we going to find them and how are we going to engage them? So putting together things like marketing toolkits that are specifically made to target crypto donors like a Tori was saying, right, you're probably not going to try to collect crypto donations with direct mail. This is a totally different donor demographic. A lot of these donors tend to be a lot younger. So if you're already fundraising from younger donors or trying to target younger donors, some of those same principles of, you know, then being much more online and digitally savvy will definitely apply.

09:32 - 10:01

And then on the donor side of things, we're really pushing to create a culture of giving in the crypto community. So we've started things like you mentioned in the intro, crypto giving Tuesday and Tuesday. We've got a broader end of year campaign. We've got the crypto giving pledge, which is just what it sounds like for high net worth individuals who want to pledge a portion of their crypto to charity. So doing all these things on both sides of the market and then ultimately bringing those to groups that might not communicate otherwise together in one, you know, ironically centralized place on our platform.

10:01 - 10:01

That's awesome.

10:01 - 10:16

I have a question about this community, right. Because we keep talking about crypto donors, but it sounds to me like a lot of them are probably very young. Right. They're probably not even quote unquote donors yet. Right. So help me understand a little bit about the demographics.

10:17 - 10:59

Yeah, definitely. On the younger side, a lot of millennials and Gen Zs. And what's really interesting about them is from speaking with them, we found that many of them are only donating in crypto. You know, these are net new donors and net new dollars coming in to organizations. And often it's because some of these younger donors, I mean, you might think like, okay, they're younger, maybe they don't have a lot of spare cash to be donating, but they have a lot of crypto, maybe not a lot of cash in their bank account. So this is often their first time making a more significant gift. And we've seen surveys from CNBC, from Fidelity, from others showing a preference of millennials and other younger demographics investing in crypto versus, let's say, stocks. So it's going to likely become the preferred way of giving over time just because it's their preferred way of investing as well.

11:00 - 11:16

Yeah, now that that makes sense. So Editorial, go back to you. As someone who's already been successful in this space, what have you found resonates with donors and additional sort of advice you to offer to other nonprofits like what is enticing them to to make these gifts? What are some of the advantages?

11:16 - 12:01

Well, I think firstly, on the donor side, they tend to like shoutouts and social media in particular Twitter. There's a crypto Twitter for sure. And then from the nonprofit side, the first thing is culture. Are you a FUD or a FOMO organization? Fear, uncertainty and doubt or fear of missing out. And it's important to know which you are. And it may not be for everyone. Crypto philanthropy. But if it is, then you should consider the policy implications of accepting cryptocurrency. So what are the regulatory compliance financial policies to accept it? For example, we have a written gift acceptance policy not only defining the terms, but identifying what we do with anonymous donations, for example.

12:01 - 12:01

. Yeah.

12:02 - 12:14

And then if you have that in place, those are the building blocks. Those are the basics that you need to block and tackle. And then from there, having a more common strategy to communicate to your current donors and prospectively new ones.

12:14 - 12:29

Okay, that's really interesting. And then editorial, are you seeing tax treatment? I mean, so so I'm thinking about like traditional fundraising, right? Like donate your appreciated securities, right? Is this a thing? Is this something that is top of mind for crypto contributors?

12:29 - 12:36

Right. So there are tax advantages. You can talk to a tax professional from a nonprofit side.

12:36 - 12:42

Excuse me, everyone. I just have to interrupt and say Bernstein does not provide tax or legal advice. Okay, now you can keep going.

12:43 - 13:17

Then we go. And after that traditional disclaimer, I will say it is considered at the moment by the US government to be property and therefore tax with capital gains depends on the time when you buy it and you sell it. There's details there, but it's like property. So we accept property gifts that Save the Children that right. The most similar one is stocks in a company. So if you can donate stocks to Save the children, you can also donate your cryptocurrency to save the ocean and you can even build it into a smart contract with an NFT drop.

13:17 - 13:28

I don't even know what that means, but that sounds like a good strategy for people to learn about. So that's that's fantastic. And that's why you are here on this podcast.

13:28 - 13:45

So on that note, Alex, you know, I've gotten some organizations say, well, I don't know, our donors are older, right? Like, I don't know if we're really the right kind of organization. What are you seeing in terms of like what the right is there a specific type of organization that makes the most sense for this?

13:46 - 14:17

I mean, we're seeing all shapes and sizes of nonprofits have successful fundraising campaigns when it comes to crypto. And and the concern you mentioned is probably the most common one we get, right. They'll say our donors are older or they're not tech savvy. They don't have crypto or we don't think they have crypto. And then they start accepting crypto and they're pleasant. He's surprised by how many donations they get because most donors aren't going to reach out and ask. They'll take crypto, they'll simply go somewhere else that already takes it. So if you're not on the menu, they can't even choose you in the first place. Really. So I think many people are really surprised by that.

14:18 - 14:23

That's interesting. Are you seeing more in terms of like urban areas versus rural or.

14:23 - 14:33

I mean, it's pretty across the board. But in general, like, you know, there are certainly crypto hotspots throughout the country in places like Miami and New York and San Francisco, kind of the tech and finance.

14:33 - 14:33

. Hub sort.

14:33 - 14:36

Of the world that you'd expect is where you see a lot of crypto adoption.

14:37 - 15:04

I mean, the nice thing is this is all virtual, right? So people can be giving anywhere to anywhere. Something to keep in mind. Also in Alex, you just mentioned that donors will look to see if an organization accept crypto or not. And if they don't accept it, then they just move on to the next organization. Are you seeing more are you advising organizations on putting something on their website, for instance, that says We accept crypto, come talk to so-and-so or and I'm curious as to how you guys do that.

15:04 - 15:31

Yeah. So I mean, we certainly recommend that every nonprofit that works with us, they have some way to give crypto directly on their website. So when they sign up with us, they get a donation widget that is both on our crowdfunding site but also embeddable on their own site. So usually under other ways to give, people are setting up a, you know, a donate crypto option and you can actually track which donations come through each source. You know, the majority end up coming through our site for most of our clients, but it's important that you have it in both places.

15:31 - 15:33

Yeah. Tori, how how have you handled that?

15:33 - 16:01

Yeah, we saved the children on our website. Savage on the door. As Alex adjusted, we embedded the giving block widget on a page. It's forward slash bitcoin, but of course we accept much more than just Bitcoin. We also have put it on the other ways to help page to other ways to donate. And then finally, in especially in times of emergency or the year end or tax time, we feature crypto giving on our homepage, for example, in our response to the Ukraine conflict.

16:02 - 16:11

Great. Very smart. Okay. That is so helpful. Well, you have each given us a lot to think about on this topic. And so any final thoughts.

16:11 - 16:31

Is one final thought from my side as I think it's not as scary or complicated as I think many nonprofits expected to be. We've really tried to simplify this. So it's just like fundraising, any other type of donation method. So I'd say, you know, take some time to to learn a bit about it, but I think you'll be pleasantly surprised by how straightforward we've made it.

16:31 - 16:32

That's great. Thank you.

16:32 - 16:50

Tori And I would say from a safety perspective, you can be risk averse but still take risks that are calculated and planned. And this falls under the area of innovation. So if you have an appetite for innovation, try it. Learn. Try again.

16:50 - 16:58

Awesome. Great words to live by. Thank you both so much. That's really all we have time for, but thank you for joining me.

16:58 - 17:32

For more on this hot topic, check out the link to our blog in our episode description and thank you all for listening. If you would like to learn more on Bernstein Foundation and Institutional Advisory Services, please see the link in this episode's description. If you enjoyed this episode and haven't subscribe to our podcast, please go to the iTunes Store or Google Play or wherever you listen to podcasts to subscribe and rate us. Also, please email us with your thoughts, questions and feedback to insights at Bernstein dot com and be sure to find us on Twitter at Bernstein. P.W. up.